What is something that almost nobody knows about retiring early?

Question

Everyone wants to FIRE, but wondering if there are any misconceptions about the retirement life? One thing I remember seeing is that retirement is not like vacation.

Randy Reinaldo · Accepted Answer

The 4% rule is based on past historical data that involves bond super long cycle and it is only for 30 years. With FIRE, you live out of your investment for minimum 40-50 years. Yet they use 30 years assumption. It works only in the US market, there is NO market in Asia that can sustain 4% rule, not even STI.

Now that stocks recently has outstanding return, the creator of 4% rule itself has changed / revised the 4% rule in to higher %. But i personally disagree, stock has mean reversion in the long run, so expected return in the long future cant be as outstanding as the last decade.

But in conclusion, I am just very amazed that people can advocate early retirement based on rule of thumb.

Chris · Answer

I think one consideration is, having something to retire to.

Generally, retiring early and doing nothing will end up causing yourself, ironically, more problems as you might not know what to do with all your time. Most famous people who've FIRE'd spend their time pursuing passion projects that they could not when they were working, such as: writing, music, small businesses, volunteering full-time, long travels etc.

thefrugalstudent · Answer

Hi Rachelle,

I agree! I think the misconception that people have is if you FIRE, you can do nothing with your life and not work anymore and that will feel great. But from the many podcasts I have listened to, the most common complaint that people have after they have achieved FIRE is that they have no purpose in life. They don't work since they don't have to anymore, and for a while, this feels nice.

Being able to sleep in, going out when everyone else is at work, and etc. But after that, life starts to get mundane. They don't know what to do with all the time they have on their hands.

Personally, the reason I want to FIRE is not so that I can stop working, but rather that I don't have to so that I can do the things I want to instead. Aside from the financial stability, it will allow me to spend time doing things that I am passionate about and enjoy, but may not necessarily be able to sustain my lifestyle if I were to do it full time, on a paycheck. I will also be able to spend more quality time with my partner and our families and take them on trips overseas.

But I think it's extremely important to still be doing some form of work, whether it is an actual job or a hobby that you are getting more committed to. Time is precious, we shouldn't spend it idling around!

Regards,

thefrugalstudent

Gavin Tan · Answer

Hmm, I guess the duration that it takes to actually achieve FIRE! Many people assume, "If I just save a lot and invest aggressively, I'll be able to FIRE in x amount of years". In reality, many things could happen that can set your timeline back by a couple of months to even a year or 2. I think the most important thing about achieving FIRE is to understand why you want to achieve it. This will serve as great motivation when things get rough and you hit setbacks!

For myself personally, I wanna achieve FIRE so I can do the things I enjoy doing be it coding, investing in new Start-Ups, or even starting one myself!

Zac · Answer

I think we need to consider that our retirement expenses may not be the same as our current expenses. (And hence our projections of how much we need in retirement may be under-estimates.)

Maybe we're working part-time in retirement and dedicate some time to leisure, travel, holiday. Maybe we're meeting up with friends/family more regularly, spending more on get-togethers. Etc. Can't really say like, oh at 25 years old today I need $2k monthly so that's what I'll need in retirement. Then need to account for inflation also - $2k per month at 25 will not be the same amount at 45 years old.

I know for a fact that I intend to spend way more in retirement than I do now. So while I'm spending within my means now, I'm also planning and investing to achieve a much larger monthly expenditure in retirement.​​​

saylavee · Answer

To most, retirement means able to live a life wo having to worry about money and many see it as a life goal whether young or old. The thing is, we should retire with a sustainable intention and not just for the sake of not having to work anymore/sleep in/holidays etc. All these may seem perfect but no matter how good something is, a constant repetitive routine will make things boring. Like what elon musk tweeted after he became the richest man in the world, " well, back to work". Lucky for investors, imagine if he said, "screw this, im out of Tesla." If i'm gonna retire at my 40s, what am I gonna do for the next 20 years? Hopefully there will be an answer to it.​​​